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DESERT CAPITAL REIT, INC.
ANNOUNCES SECOND QUARTER 2006 RESULTS
HENDERSON, Nev., (August 28, 2006) Desert Capital REIT, Inc. today announced that its net income for the second quarter of 2006 totaled $3.5 million or $0.25 per share, as compared to a net income of $0.9 million or $0.27 per share reported for the second quarter of 2005. For the six months ended June 30, 2006, net income totaled $6.5 million or $0.52 per share, as compared to $1.6 million or $0.54 per share for the same period in 2005.
Total revenues for the quarter ended June 30, 2006, totaled $6.9 million, as compared to $4.3 million in the same period in 2005. Interest income for the second quarter was $4.2 million, as compared to $0.9 million reported for the same period in 2005. The company also generated non-interest income, primarily from fees on loans brokered to third parties, of $2.7 million for the quarter ended June 30, 2006, as compared to $3.4 million for the same period in 2005.
At June 30, 2006, the net balance in the mortgage investment portfolio was $134 million, as compared to $101 million at March 31, 2006. The average balance of the loan portfolio during the second quarter was $107 million and the average yield on these assets for the quarter was 13.5% compared to an average yield of 13.5% for the first quarter of 2006.
Todd B. Parriott, CEO and Chairman of the Board of Directors of Desert Capital REIT, Inc., stated, “We made significant strides in the second quarter that will provide lasting benefits for our stockholders including the issuance of approximately $31 million of long-term junior subordinate notes, which increases our portfolio of loans and our financial flexibility. This additional source of capital is expected to generate an attractive spread for an extended period of time.”
Financing Activity
Desert Capital issued approximately $31 million of long-term junior subordinated notes through a private placement of trust preferred securities. The proceeds from the notes were used to invest in mortgage loans.
Portfolio Activity
During the second quarter of 2006, DCR funded all or a portion of 35 loans totaling $51.3 million. Of the new loans, 15 were acquisition and development loans totaling $44 million and 20 were construction loans totaling $7.3 million.
At June 30, 2006, DCR's loan portfolio contained 121 loans with a net outstanding principal balance of $134 million, and a weighted average current interest rate of 13.4%.
Dividend
Desert Capital REIT declared dividends of $0.30 per share for the second quarter of 2006.
About Desert Capital REIT, Inc.
Desert Capital REIT, Inc., is a Henderson, Nev.-based real estate investment trust that invests in loans to owners and developers of real estate properties. Formed in December 2003, Desert Capital’s portfolio of mortgage loans consists of acquisition and development, construction, commercial property and residential loans. For more information, please call (800) 419-2855 or visit www.desertcapitalreit.com.
About Consolidated Mortgage, LLC
With nearly 30 years of continuous real estate investment success, Consolidated Mortgage, LLC is one of the largest private trust deed investment firms in Nevada, with over $400 million currently outstanding in brokered loans. The company is located at 1291 Galleria Drive, Suite 220, Henderson, NV 89104. For information, please call (702) 739-9090.
Safe Harbor Statement
Statements included herein that state the company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 which by their nature, involve known and unknown risks and uncertainties. The company’s actual results, performance or achievements could differ materially from those expressed or implied by such statements.
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June 30, |
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December 31, |
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2006 |
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2005 |
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(Unaudited) |
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ASSETS |
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Mortgage investments - net |
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$ |
134,425,908 |
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$ |
67,649,251 |
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Loans held-for-sale |
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4,868,181 |
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1,461,147 |
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Goodwill |
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13,388,555 |
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13,388,555 |
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Building and equipment - net |
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7,857,936 |
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8,029,250 |
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Land |
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1,820,000 |
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1,820,000 |
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Cash and cash equivalents |
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2,841,891 |
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4,459,289 |
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Interest receivable |
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1,260,472 |
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572,944 |
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Deferred financing costs |
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993,545 |
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- |
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Investment in equity affiliates |
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928,000 |
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- |
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Other |
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323,258 |
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145,356 |
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Total assets |
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$ |
168,707,746 |
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$ |
97,525,792 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Notes payable |
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$ |
10,068,148 |
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$ |
12,112,386 |
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Junior subordinated notes |
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30,928,000 |
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- |
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Dividends payable |
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1,428,679 |
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880,633 |
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Deferred income taxes |
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60,215 |
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- |
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Accounts payable and accrued expenses |
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908,241 |
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1,708,444 |
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Total liabilities |
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43,393,283 |
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14,701,463 |
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Preferred stock, $0.01 par value: 15,000,000 shares |
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authorized, none outstanding |
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- |
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- |
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Common stock, $0.01 par value: 100,000,000 shares authorized; 14,037,465 and 9,388,994 |
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shares issued and outstanding on June 30, 2006 and December 31, 2005, respectively |
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140,375 |
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93,890 |
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Additional paid-in capital |
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126,401,263 |
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83,005,684 |
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Retained earnings |
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(1,227,175 |
) |
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(275,245 |
) |
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Total stockholders' equity |
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125,314,463 |
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82,824,329 |
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Total liabilities and stockholders' equity |
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$ |
168,707,746 |
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$ |
97,525,792 |
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Consolidated Statement of Operations
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Three Months |
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Six Months |
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Ended June 30, |
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Ended June 30, |
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2006 |
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2005 |
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2006 |
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2005 |
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INTEREST INCOME: |
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Mortgage investments |
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$ |
4,019,247 |
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$ |
863,445 |
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$ |
6,873,195 |
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$ |
1,544,381 |
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Other interest |
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160,597 |
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40,228 |
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316,940 |
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73,803 |
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Total interest income |
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4,179,844 |
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903,673 |
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7,190,135 |
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1,618,184 |
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INTEREST EXPENSE: |
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Interest expense |
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387,794 |
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262,417 |
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685,688 |
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501,306 |
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Total interest expense |
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387,794 |
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262,417 |
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685,688 |
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501,306 |
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Net interest income |
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3,792,050 |
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641,256 |
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6,504,447 |
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1,116,878 |
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Provision for loan losses |
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78,146 |
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8,590 |
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125,749 |
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27,606 |
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Net interest income after provision for loan loss |
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3,713,904 |
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632,666 |
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6,378,698 |
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1,089,272 |
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NON-INTEREST INCOME: |
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Loan brokerage fees |
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2,182,006 |
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2,554,319 |
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4,447,093 |
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5,419,450 |
Service and other loan fees |
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442,736 |
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812,178 |
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1,013,071 |
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1,364,803 |
Other |
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91,058 |
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64,834 |
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283,914 |
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66,631 |
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Total non-interest income |
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2,715,800 |
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3,431,331 |
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5,744,078 |
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6,850,884 |
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NON-INTEREST EXPENSE: |
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Compensation |
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554,339 |
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530,565 |
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1,020,796 |
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937,454 |
Management fees |
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1,204,704 |
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888,741 |
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2,309,508 |
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1,745,774 |
Professional fees |
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449,890 |
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511,990 |
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874,964 |
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984,804 |
Insurance |
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106,811 |
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116,146 |
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|
214,059 |
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229,131 |
Depreciation |
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107,938 |
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15,849 |
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214,966 |
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32,758 |
Other |
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402,523 |
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259,155 |
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948,202 |
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591,076 |
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Total non-interest expense |
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2,826,205 |
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2,322,446 |
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5,582,495 |
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4,520,997 |
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Net income before taxes |
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3,603,499 |
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1,741,551 |
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6,540,281 |
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3,419,159 |
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Income tax expense |
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60,215 |
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193,279 |
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60,215 |
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362,016 |
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Income before minority interest |
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3,543,284 |
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1,548,272 |
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6,480,066 |
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3,057,143 |
Income allocated to minority interest |
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- |
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624,461 |
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- |
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1,435,357 |
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Net income |
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$ |
3,543,284 |
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$ |
923,811 |
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$ |
6,480,066 |
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$ |
1,621,786 |
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Earnings per share - basic and diluted |
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0.25 |
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0.27 |
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0.52 |
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0.54 |
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